Problem
A buyer has a supplier specific investment that costs 1000. This investment is only useful for that supplier. It saves the buyer 1500 (net savings of 500). Supplier can raise the price charged by 750 (for simplicity assume that this is the only amount that it can be raised or not raised at all). The buyer can then switch suppliers and receive the good at the same terms that he currently has. The supplier losing the buyer's business costs him 1000. Assume that the buyer can get an amount of the original investment back that is less than 1000 if he switches suppliers. For what amount or greater would there be an equilibrium where the buyer makes an investment.
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.